Newcrest quarterly report likely to surprise on upside

Relief may be in sight for Newcrest Mining, which has been hammered by investors this year primarily due to a string of nasty production surprises.

Australia’s largest goldminer had a rare positive day on the stockmarket yesterday, gaining almost 5 per cent as word began to filter out that its June quarterly report, due out today, would contain none of the bad news to which investors have become accustomed.

Newcrest executives are understood to have been busy making it known that the company will meet its revised full-year production guidance of 2.25-2.35 million ounces of gold.

Based on those discussions, most analysts are expecting a June quarter production result in the vicinity of 585,000-590,000 ounces and cash costs less than $600 an ounce.

This would be a big improvement on the March quarter’s 532,237 ounces at $609 an ounce, which was announced in April, at the same time the company downgraded its production guidance for the second time in six months.

JPMorgan said: “A result in line with guidance [could be a] potential turning point" for the battered goldminer, whose share price has lost 25 per cent this year.

In related news, Harmony Gold Mining, Newcrest’s partner in the giant Wafi-Golpu project in Papua New Guinea, seems to have come to terms with the likelihood of the block cave development costing as much as $US5 billion, compared with its original estimate of $US3 billion.

Harmony chief executive
Graham Briggs
admitted as much in a recent press interview. He has previously said the company could raise as much as $1 billion by forward selling copper from the project to fund its share of costs.